Why personal finance must be set upon a strong foundation
The more the economy continues to bump along, without much evidence of rebounding, the more anxious people become about the future. We don’t like uncertainty, especially financial uncertainty. Have you noticed how many people are ready for economic change? Nearly all of us! And regardless of how we’ve weathered this recessionary storm, we all have a need for a solid financial foundation.
Poor employment numbers, diminished value on investments, lost equity in real estate—these and more have pushed many of us out of our comfort zone during the last several years. This has instilled some with an urgency to find new ways of doing things and has led to some good changes. Many, though, are still looking for direction, hope and a positive outlook about the future.
Laying a solid financial foundation, regardless of the economic climate or forecast, always includes the mixture of our beliefs and behaviors. Thus, our financial condition is very connected to our spiritual life.
How will we see more value, more fruitfulness produced in our bank accounts? The same way we see it produced in our spiritual life. The answer lies “below ground,” in the root system of your life.
In Psalm 1, David likened the righteous person to “a tree planted by streams of water, which yields its fruit in season and whose leaf does not wither.” For the tree planted by the stream, it doesn’t matter how dry the climate is. The stream, not the rain, is its water source. It gets its water whether it rains or not—whether the climate conditions are favorable for growth or not. It is rooted into good soil and immune to leaf-withering heat.
Jesus talked about our being rooted like this in the parable of the sower. Shallow soil, He noted, can produce quick change and often looks like the better condition for fast growth. But soil without depth prevents lasting change. Rich soil, Jesus said, produces deep roots that can withstand the elements.
In the same way, a good foundation is laid below the ground to help whatever is built on it to stand, and withstand.
When major earthquakes hit Haiti and Chile in 2010, the difference in the damage they caused was significant. The Chile quake registered magnitude 8.8 compared with magnitude 7 for the Haiti quake, yet the damage in Chile was far less than in Haiti. What made the difference? Better building codes. The people of Chile were better protected by codes that required better foundations.
In our work with churches, we’ve found that for people to develop a solid financial foundation requires the right mix of methods and tools. Churches whose leaders offer their people compelling curriculum, small-group interaction, opt-in accountability structures, methods to measure progress, and ongoing reinforcement through discipleship can transform their people’s thinking and behavior. But without these interlocking methods and structures, the chance of actual change goes down dramatically.
Here are four strong action points that—because they require you to change your behavior toward money—will start helping you lay a strong foundation on which to build your finances:
- Create an emergency fund of at least $1,000.
- Draw up a clear, workable debt-elimination plan that gets rid of all debt except your home mortgage.
- Develop the habit of naming every dollar you spend before the month begins.
- Get rid of credit cards and use cash in discretionary spending categories.
Above all else, the key to building a solid financial foundation is wisdom. Solomon said in Ecclesiastes 7:19, “Wisdom makes one wise person more powerful than ten rulers in a city” (NIV). God has called us to be wise, effective change-leaders. This includes with finances.
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